Commentary and musings on the complex, fascinating and peculiar world that is securities regulation

Thursday, December 15, 2011

House Omnibus Budget Legislation Sets SEC Budget for FY 2012

The House Consolidated Appropriations Bill for FY 2012, HR 3671, includes $1.3 billion for the SEC, which is $136 million over last year’s level but $86 million below the President’s request. The legislation also rescinds $25 million from the new Dodd-Frank mandated reserve fund, which Committee Chair Hal Rogers called a slush fund for the SEC for programs that Congress has not approved.

In testimony earlier this year before the Senate Banking Committee, SEC Chair Mary Schapiro noted that the Dodd-Frank reserve fund would allow the SEC to respond to unexpected market events, invest in multi-year IT projects, and manage authorized programs during continuing resolutions. If this fund is eliminated or the SEC is not permitted to access the fund, she cautioned, it would have significant consequences for important IT projects, such as building out the infrastructure to analyze the significant amounts of critical new data the SEC will soon receive from previously unregulated markets, including a segment of the $600 trillion OTC derivatives market and hedge fund and other private fund advisers. Without the appropriate IT infrastructure, the SEC’s ability to establish effective monitoring regimes will be significantly hindered, she warned.